Online banks have fought to offer the best rates on savings and money market accounts. But one institution has proven that it has what it takes to stay at the top.
DollarSavingsDirect raised its savings account rate in late February from 1.6 percent to 1.8 percent APY. From a historical perspective, the new rate is a very low yield. But by today’s standards, it’s the market’s best nationally available rate.
The Dollar Savings Account’s low minimum deposit makes this deal irresistible, particularly for savers struggling to create a cash reserve.
You’ll only need to deposit $1 to set up your account and qualify for DollarSavingsDirect’s top savings rate. In contrast, you’ll need $5,000 to earn the top rate at Popular Direct (1.65 percent APY).
See how other high-yield savings account rates stack up. Then calculate how much interest you could earn over time.
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Why you’ll want this savings account
Besides its interest rate, there are several other reasons to apply for a Dollar Savings Account.
There are no monthly service fees or minimum balance requirements. And instead of switching banks, you can link your savings account to an existing checking account. You’ll transfer funds from there to make future deposits into your Dollar Savings Account.
Interest compounds daily rather than monthly or quarterly. Through the power of compound interest, your savings will grow and you’ll reach your financial goals faster.
Alluring CD deals
In addition to its savings account, DollarSavingsDirect offers relatively competitive CD rates. That’s exciting if you want to earn a higher yield.
The online bank’s CD rates aren’t the highest ones in the market, but with their $1,000 minimum deposit requirement, they’re not difficult to qualify for.
The best CD deal available at the bank is its 5-year CD paying 2.8 percent APY. The highest nationally available 60-month CD pays 3 percent APY.
If you often drain your savings account, a CD could help you break that bad habit. But if five years seems like a long time to lock up your funds (especially since rates are rising), you may be better off with a more liquid account.
After all, tapping into a 5-year CD before it matures and withdrawing part of your original deposit will cost you 180 days’ interest. You won’t pay a penalty, however, for transferring credited interest out of your account before the end of your 60-month term.
Opening a DollarSavingsDirect account
To open a DollarSavingsDirect CD or savings account, you’ll need to fill out an application online. Applicants must:
- Be at least 18 years old
- Be a U.S. citizen or resident alien
- Have a Social Security number
- Have a U.S. address
Before you can apply for a CD, you’ll need to open a Dollar Savings Account first.
Funding a Dollar Savings Account or CD can be done through an electronic transfer from the external bank account linked to your Dollar Savings Account. You can also mail in a check from any personal checking account to make your initial deposit. Once you open a Dollar Savings Account, you can use some of those funds to open a CD.
DollarSavingsDirect is an online division of Emigrant Bank, an institution headquartered in New York City that was founded in 1850 by Irish emigrants. Deposits up to the legal limit ($250,000 per depositor, per qualified account type) are insured by the Federal Deposit Insurance Corp.
In addition to its savings account and 5-year CD, DollarSavingsDirect offers 6-month, 12-month, 16-month and 24-month CDs.
Emigrant Bank earned four out of five stars in Bankrate’s latest review of its financial health.